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1
IUMI
Brussels meeting 2015
Cargo Presentation
Patrizia Kern Ferretti
Swiss Re Corporate Solutions
Chairman Facts & Figures Committee
2
Economic Outlook
• Purchase Manager Index ( PMI )
• GDP Forecast
• Inflation Forecast
• Short Term interest rates
• Stock Market
The global economic recovery continues, although it remains fragile and uneven.
Recent slowdown in growth in key emerging markets such as China and Brazil and
parts of Europe.
Heightened geopolitical tensions (Greece, Ukraine, Middle East) creating headwinds.
3
Economic activity generally expanding
…but recent slowdown in some countries
20
30
40
50
60
70
2008 2009 2010 2011 2012 2013 2014 2015
Purchasing Manager Indices
Germany France ItalyChina USA JapanUK EU Brazil
4
Advanced economies projected to
contribute more to the global upswing
Continued monetary policy accommodation as well as lower oil prices should
support global aggregate demand and activity.
Source: Swiss Re Economic Research & Consulting
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP real growth forecast
United States
Euroland
United Kingdom
Japan
South & East Asia
World
Brazil
China
India
5
Inflation expected to remain contained,
at least in the near-term
Source: Swiss Re Economic Research & Consulting
Given the extent of economic slack in the major economies, inflation is likely
to remain contained even as growth continues.
-2%
0%
2%
4%
6%
8%
10%
12%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Inflation (CPI) forecast
United States
Eurozone
United Kingdom
Japan
Brazil
China
India
6
Short term interest rates
Source: Datastream
Short term market interest rates in the major economies remain very low.
But prospective divergence in future path of monetary policies in major
economies could cause problems for some emerging markets.
7
Stock Market
Source: Bloomberg
Equity prices have generally continued to rise on strengthening company
earnings, hopes of sustained global economic recovery and significant
financial market liquidity.
8
World Trade
• Trade Overview
• Commodity Prices
• Freight Rates
• Demand for transport
• Trade flows
• Port Activity index
Trade stagnated in 2014 H1 on the back of lower GDP and import demand,
particularly in natural resource export regions such as South and Central America.
WTO Forecasts for world trade revised lower with significant downside risks.
9
Trade growth remains subdued
-15
-10
-5
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014F 2015F
Apr 2014
Sep 2014
% WTO forecasts for growth in world merchandise trade
Level of world exports was well below trend till 2010, then it exceeded the
trend, reflecting the economic recovery.
10
Level of exports remain well below trend
* From 2008: China figures included. Premium in 1.000.000 us$ source: WTO / IUMI
** From 2010: Latin America (Brasil from 2006), Middle East and non-IUMI Asian figures included
index 100=1990
0
50
100
150
200
250
300
350
5000
7000
9000
11000
13000
15000
17000
19000
21000
23000
25000
Merchandise exports vs. Cargo premium volume *
Cargo Premium Volume Export Volume
11
Oil & Gas prices have fallen
at different speeds
Source: Bloomberg
Slower prospective growth in key commodity importing nations such as China has hit
demand for oil.
At the same time, excess supply has (linked to US shale gas extraction and continued
OPEC production) contributed to sharp fall in oil and gas prices.
0
50
100
150
200
250
300
2000 2003 2006 2009 2012 2015
Oil & Gas Spot Index
Brent_Spot Gas_Spot
Chocolate crunch
Ebola-linked disruptions in W. Africa have pushed cacao prices higher.
Source: International Financial Statistics (IMF) 12
Other agriculture prices have generally
eased recently
Source: Bloomberg
Effect of US drought in 2012 pushed corn prices higher. After increased volatility in recent years, better balanced supply and demand
is underpinning some easing in agricultural commodity prices.
13
14
Industrial metal prices: Metals
Weakening growth in China dragging down industrial metals prices.
Precious metals affected by investment demand and "safe haven" flows.
Source: Bloomberg
0
50
100
150
200
250
300
350
2000 2003 2006 2009 2012 2015
Metals Spot Index
Gold_Spot Silver_Spot Platinum_Spot Copper_Spot
15
China needs Steel
China's infrastructures building programme represents an increasing demand
of Iron Ore, and local supply is not enough to satisfy it.
Source: Bloomberg
0
10
20
30
40
50
60
70
80
90
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Chinese iron ore imports 1000 metric tonnes
16
Freight rates have weakened again
Freight rates under pressure from weakening import demand from China and
persistent excess shipping capacity.
But sentiment in the shipping industry is reportedly improving on hopes of a
prospective upturn in freight rates. Source: Bloomberg
0
5000
10000
15000
20000
2008 2009 2010 2011 2012 2013 2014 2015
Baltic Panama Index Baltic Supramax Index Capesize source: Bloomberg
17
Demand for transport: Seaborne trade
0
2000
4000
6000
8000
10000
12000
140001990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
MnT
Source: MSI, August 2014
General Cargo Container Cargo Liquid Bulk Dry Bulk
Ranking From To Volume % of WT
1 Asia North America 1012 5.53%
2 Asia Europe 855 4.67%
3 Middle East Asia 703 3.84%
4 Europe Asia 667 3.64%
5 Europe North America 506 2.76%
18
Trade Flows in 2013
Source: WTO website. Units: billion US$
Intra-region Trade
Inter-region Trade
Ranking Region Volume % of WT
1 Europe 4'560 24.92%
2 Asia 3'076 16.81%
3 North America 1'189 6.50%
19
Cargo Accumulations
• Ports and Warehouses Accumulations
• Stock Throughput: Thailand floods
• Accumulations on Vessels
20 Source: Swiss Re Safe Havens Publication 2010
Ports and Warehouses Accumulations:
A challenge for Re / Insurers
•Uninsured goods / double insured goods
•Seasonality
•Value per TEU
•Dwell time
•…
TIV
•Perils
•Type of packing
•Loss Prevention / Mitigation
•…
Goods
Exposure
21
'Superstorm' Sandy – a record breaking
catastrophe( 1 / 2 )
• Superstorm Sandy struck on the evening of the 29th October 2012 southwest of Atlantic City, N.J.
• Estimated to be 6th costliest event in global insurance history • Insured losses accumulated to $ 18.8 billion excluding another $ 7.1 billion
covered by NFIP (National Flood Insurance Program)
• Economic losses are estimated at $ 70 billion
• Set historical records for water levels in NY, NJ & Connecticut
• Caused 280 fatalities & the loss of homes and personal belongings for thousands
It has shown us that also the Northeast of America can be hit by hurricanes, hurricane season can last until Nov. 30th, the advantages of having flood coverages and existence and language of storm deductibles.
22
Superstorm Sandy –
the consequences ( 2 / 2 )
• Electrical transformers in commercial buildings hauled to upper floors • The ability to shutter key tunnels, airports and subways needed • Hospitals to have backup power on high ground instead of on lower floors or in basements • Insurance coverage including Storm Surge • 2nd costliest since Katrina in 2005 • Increase Burglaries • Port and Terminal Operators contingency plans had only addressed wind; they are now also considering flood
and tidal surge • NOAA (National Oceanic and Atmospheric Administration) is developing a tool to help predict/project flood
extent from tidal surge • Former contingency plans included bringing in back-up generators and replacement equipment. During Sandy,
government agencies confiscated the backups to help save lives, a higher priority than the property. Insured/clients may not have access to these replacements in future events
• Uniform and tighter definitions of the terms "Flood" and "Windstorm" have been added to all policies • Higher and percentage deductibles have been added to Cargo Warehouse policies, particularly locations
residing in Flood Zones A & B
23
MV Rena
Astrolabe Reef, New Zealand – 5th October 2011
5th October 2011
• Rena ran aground
Astrolabe Reef, 12
nautical miles offshore
of Tauranga Harbour,
NZ
• Ship had been declared
a total construction loss
• 300-400t of bunker fuel
leaked & affected
wildlife & shore
• Vessel was carrying
1368 containers of
which 88 had already
fallen of board
Wreck removal: $114m
Pollution: £10m
Cargo: $0.6m
Severance pay & crew:
$0.4m
Gross reserve: $125m
2nd March 2012
• Successful stripping
during first weekend in
January
• In bad weather Rena
broke in tow with stern
section moving 30
meters away from bow
section
• Resulting in loss of
several containers
Wreck removal: $164m
Gross reserve: $175m
5th April 2012
• Unforeseeable weather
conditions delayed
removal
• Significant change of
conditions & position of
wreck
• Intervention of NZ
authorities
• April 4th the aft sank
further in bad weather
Wreck removal: $105m
Pollution: $30m
Cargo: $35m
Costs: $9m
Iwi: $5m
Crew: $6m
Gross reserve: $300m
9th June 2013
• Higher cost for marine
operations, beach
cleaning, pollution
response and claims
increased gross reserve
• Weather & adverse
swells have caused
numerous interruptions
Wreck removal: $132m
Cargo Handling: $70m
Pollution: $30m
Iwi: $10m
Cargo or other claims:
$10m
Crew: $1m
Gross reserve: $350m
Source: Radio New Zealand Source: Maritime New Zealand Source: New Zealand History Source: Antipodean Mariner
24 Source: Wikipedia / Maersk Website
Accumulation on Vessels
19,100 TEU capacity
184,320 DWT
25 Source: Wikipedia / Maersk Website
Accumulation on Vessels
Today
- Length: 399 metres
- Beam: 58 metres
- Capacity: 19,100 TEU
- DWT: 184,320
- GRT: 187,541
Future
- Length: 396 metres
- Beam: 59 metres
- Capacity: 19,224 TEU
Accumulation on Vessels:
Car Carriers
8,000 Cars 26
Accumulation on Vessels:
LNG Carriers
266.000 m3 27
Accumulation on Vessels:
Bulkers
DWT: 400.000
75.000.000 US$ 28
Accumulation on Vessels
DWT: 441.000
385.000.000 US$ 29
30
Appendix
• World Trade Figures
• Theft to cargo in Transit in Europe
Intra- and inter-regional
merchandise trade, 2013
Destination
Origin North America
South and Central
America Europe CIS Africa Middle East Asia World
Value
World 3082 782 6669 566 618 760 5423 18301
North America 1189 216 368 19 40 78 501 2418
South and Central America 178 195 121 9 20 18 178 736
Europe 506 129 4560 253 222 220 667 6646
Commonwealth of Independent States (CIS) 33 9 407 149 13 19 139 779
Africa 54 30 216 2 97 18 160 602
Middle East 110 11 143 6 38 135 703 1347
Asia 1012 191 855 128 188 270 3076 5773
Share of regional trade flows in each region's
total merchandise exports
World 16.8 4.3 36.4 3.1 3.4 4.2 29.6 100.0
North America 49.2 8.9 15.2 0.8 1.7 3.2 20.7 100.0
South and Central America 24.2 26.6 16.4 1.2 2.7 2.5 24.1 100.0
Europe 7.6 1.9 68.6 3.8 3.3 3.3 10.0 100.0
Commonwealth of Independent States (CIS) 4.2 1.2 52.2 19.1 1.7 2.5 17.8 100.0
Africa 8.9 4.9 35.8 0.3 16.2 3.0 26.6 100.0
Middle East 8.2 0.8 10.6 0.5 2.8 10.1 52.2 100.0
Asia 17.5 3.3 14.8 2.2 3.3 4.7 53.3 100.0
Share of regional trade flows in world
merchandise exports
World 16.8 4.3 36.4 3.1 3.4 4.2 29.6 100.0
North America 6.5 1.2 2.0 0.1 0.2 0.4 2.7 13.2
South and Central America 1.0 1.1 0.7 0.0 0.1 0.1 1.0 4.0
Europe 2.8 0.7 24.9 1.4 1.2 1.2 3.6 36.3
Commonwealth of Independent States (CIS) 0.2 0.1 2.2 0.8 0.1 0.1 0.8 4.3
Africa 0.3 0.2 1.2 0.0 0.5 0.1 0.9 3.3
Middle East 0.6 0.1 0.8 0.0 0.2 0.7 3.8 7.4
Asia 5.5 1.0 4.7 0.7 1.0 1.5 16.8 31.5
Source: WTO website. Units: billion US$
31
Global Cargo Theft Risk - 2014
Source: Freight Watchers
32
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Germany: Theft Incidents Statistics 2014
Germany Heat Map
Source: Freight Watchers
33
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
France: Theft Incidents Statistics 2014
France Heat Map
Source: Freight Watchers
34
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Italy: Theft Incidents Statistics 2014
Italy Heat Map
Source: Freight Watchers
35
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
UK: Theft Incidents Statistics 2014
UK Heat Map
Source: Freight Watchers
36
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Spain: Theft Incidents Statistics 2014
Spain Heat Map
Source: Freight Watchers
37
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Netherlands: Theft Incidents Statistics 2014
Netherlands Heat Map
Source: Freight Watchers
38
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Belgium: Theft Incidents Statistics 2014
Belgium Heat Map
Source: Freight Watchers
39
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
US: Theft Incidents Statistics 2014
Source: Freight Watchers 40
Canada: Theft Incidents Statistics 2014
Source: Freight Watchers
Canada Heat Map
41
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Mexico: Theft Incidents Statistics 2014
Source: Freight Watchers
Mexico Heat Map
42
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Africa: Theft Incidents Statistics 2014
Source: Freight Watchers
43
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Asia: Theft Incidents Statistics 2014
Source: Freight Watchers
China Heat Map
Bangladesh Heat Map
Philippines Heat Map
India Heat Map
44
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Central & South America 1:
Theft Incidents Statistics 2014
Source: Freight Watchers
Brazil Heat Map
Argentina Heat Map
Venezuela Heat Map
Guatemala Heat Map
45
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Central & South America 2:
Theft Incidents Statistics 2014
Source: Freight Watchers
Colombia Heat Map Peru Heat Map
46
RISK LEVEL
LOW
MODERATE
ELEVATED
HIGH
SEVERE
Special thanks go to
• Darren Pain and Samuel Luethi of Swiss Re Economic
Research and to Andrea Mazza of SR Corporate Solutions
• Mikaela Tamm, Nicholas Derrick and all Cargo Committee
members
for their great help in putting together this presentation
47